Monday, June 11, 2007

I hope Anna Sowa doesn't think I'm picking on her when I respond to her articles. I give her credit for writing about subjects that matter to me and Bendites, instead of generic, fluff business articles. I also sort of assume that it is the editors who are picking the titles of the articles. I've noticed that the content of the articles often contradict the rosy titles.

What I disagree with is the interpretation, the slant, they put on the information.

Yesterday I mentioned that I thought the continuing rise in business starts at a time when Bend's business underpinning are starting to unravel wasn't a good sign. That new business starts are a lagging indicator, planned while the curve was on the way up but likely to come online just as the curve is heading down.

Today, the Bulletin followed that up with the article; "LIFESTYLE ATTRACTS BUSINESSES TO REGION."

I see two problems.

One. Coming to Bend for the lifestyle and then starting a business is ass-backward.

One should start a business because there is a NEED or a DEMAND for the services or product in a town, not because an owner wants to live in a town and looks to start a business. Chances are slim that a new resident is going to understand Bend, start his or her business at an appropriate level, and then succeed. In comparison, look at Lakeview, which has grown by 'only' 3000 people in the last 5 years. I'll be willing to bet than almost any new business started there were started because of an obvious demand, probably started by a resident who knew what he was doing, rather than started because someone came from out of town and decided what the local residents wanted.

Two. "The largest increases were in construction, real estate, rentals and leasing..." Yeah, we need more of those types of businesses, just as new housing starts have dropped 45% and home sales have dropped 26%! The first example of a business in the article was a frackin' real estate office. What happens when everyone in Bend is a realtor trying to sell to another realtor?

I don't want to stomp on anyone's dream, but starting a business because you want to live somewhere, unless there is a demand for that service or product isn't going to work. How do you know if there is a demand? One quick way would be to discover what the average population demographics were for each business, discover if someone is already filling that niche. I'd be willing to submit that there are very few niches that haven't already been filled.

The other way would be to create demand for a service or niche that hasn't previously existed. Creating a business that takes groups of seniors on hikes? Uh, O.K. Thought I can't imagine the day when I'll be so senior that I can't walk down a trail by myself. But, you know, good luck. I've got a pretty good idea, after 27 years in business, after multiple locations, after living in Bend my entire life, what the likely costs and likely rewards are to most stores -- and from my perspective, an awful lot of businesses are, to be kind, micalculations.

I'm afraid that what I see are overestimations on the part of most new businesses for their services or products. Too many of the same kinds of businesses, where the pie can be sliced only so many times before everyone falls below survival levels. Businesses that are started as a 'dream', who over invest from the very start in infrastructure. Stores that are leaving behind beautiful corpses for the next 'dream' owners.

A business community that depends on people losing their money in a sinkhole in order to prosper is on shaky ground. Downtown Bend continues to fail upward -- for every new business that prospers, there are four or five 'recreational retail' stores that will be there only so long as the owners don't tire of losing money, working everyday, and watching the clocks tick.

And this is at a time when the retail climate is pretty good. If there is a slowdown, either nationally or locally, there is going to be a huge shakeout. How can 2000 real estate agents sell 100 houses a month?

I was talking to a business from Portland who told me that there were more stores in Bend offering what he did than there were in Portland. You can probably apply that to alot of businesses in Bend.

I was reading a SF book last night, and they quoted the line: "Nature doesn't care." I'd like to adapt that to business: The economy doesn't care.

Your dream business will not succeed simply because you want it to. It will succeed if there is a need or a demand. It is arrogant and foolhardy to come here from somewhere else, do little or no research, and open a business when you have no business experience. Take those long odds of succeeding in business, and for Bend, double them.

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